Traditional TV ad revenue could fall by 75%

Analysis carried out by Generator Research shows that revenue from traditional television spot ads will account for just 25 per cent of US television advertising by 2019. The result will be a market worth $13.1 billion in the down from $57.8 billion in 2008.

“This could be the beginning of a slippery slope for the television broadcasters who are about to experience what it means to lose control of a distribution monopoly, just like the music industry. The biggest losers will be the terrestrial networks who have no way of delivering their own ads over the Internet to television sets. This problem is solvable, but it will take a big effort,” commented Andrew Sheehy, head of research at Generator.

Depending on strategic choices made by television broadcasters, these dramatic losses could be offset by three new types of customer-specific advertising that would be delivered over the internet to PCs, portable devices and-most important of all-to internet-connected TV sets. Generator finds that the future for ad-funded commercial broadcast television lies in delivering three types of targeted advertisements over the Internet.

The first type would be delivered to internet-enabled TV sets or set-top boxes and could account for 30 per cent of all television advertising by 2019, representing $1.8 billion in the UK and $17.6 billion in the US.

The second type would be where targeted ads are served to PCs or portable devices that can be used to view television content. According to Generator’s projections, this second type of advertising could account for 24 per cent of all television ad revenue by 2019.

The third would be where a television broadcaster delivers scheduled programming using their existing broadcast infrastructure but where targeted commercials are delivered over the internet to broadband-enabled TV sets. This market could account for about 21 per cent of all television advertising revenue by 2019, or $12.1 billion in the US.